FEDERAL COURT OF AUSTRALIA Joukhador v Sirtes [2016] FCA 1608 File number: NSD 1323 of 2016 Judge: DOWSETT J Date of judgment: 8 December 2016 Catchwords: PRACTICE AND PROCEDURE – application to discontinue proceedings – where it is submitted that there is no federal jurisdiction – application dismissed Legislation: Australian Consumer Law Cases cited: Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 Re Wakim; Ex parte McNally (1999) 198 CLR 511 Date of hearing: 8 December 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 19 Counsel for the Applicant: Mr O Jones Solicitor for the Applicant: Thomas Booler Lawyers Counsel for the Respondent: Ms M Castle Solicitor for the Respondent: Peterson Haines ORDERS NSD 1323 of 2016 BETWEEN: MARCEL JOUKHADOR Applicant AND: GREGORY SIRTES Respondent JUDGE: DOWSETT J DATE OF ORDER: 8 DECEMBER 2016 THE COURT ORDERS THAT: 1. the application be dismissed; and 2. the applicant pay the respondent's costs up to and including the 22 September 2016 on a party and party basis and thereafter on an indemnity basis. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT DOWSETT J: 1 In these proceedings the applicant (a solicitor) sues the respondent (a barrister). The causes of action disclosed by the statement of claim are for misleading or deceptive conduct contrary to the Australian Consumer Law, and breach of the implied terms of a contract for the provision of professional services. The circumstances of the case in which the respondent was retained appear at paras 16-28 of the outline of argument of counsel for the respondent. The only other relevant facts appear to be those concerning a bankruptcy notice which was served on 10 May 2016. 2 Submissions made in opposition to an application to set aside the bankruptcy notice appear in the outline of argument which was relied upon by counsel for the respondent on that day in connection with that matter, which submissions have been supplied. The substantive proceedings presently before me were listed for hearing quite some time ago to be heard yesterday, today and tomorrow. However, quite recently it was indicated that the matter would take only two days. The applicant now seeks leave to discontinue the proceedings, primarily upon the ground that the jurisdiction of this Court has not been properly invoked insofar as concerns the claim in contract, which claim does not arise under federal law. 3 It is said that although the applicant has himself invoked the jurisdiction of this Court, it now appears that his claim for misleading or deceptive conduct is trivial and therefore not a proper basis for invoking federal jurisdiction in connection with the claim in contract. In my view, the submission is based upon a misconception of the law relating to the circumstances in which matters not otherwise within federal jurisdiction may be resolved in conjunction with the resolution of claims which fall within that jurisdiction. This matter is discussed at length by Gummow and Hayne JJ in Re Wakim; Ex parte McNally (1999) 198 CLR 511, especially at [139] and following. 4 As I understand those paragraphs the accrued jurisdiction will be invoked where the State claim and the federal claim both arise out of the same controversy. It seems to me to be clear that in the present case, that is so. However the applicant submits that where a claim is trivial, or merely colourable (meaning advanced for some ulterior purpose) such a claim cannot engage federal jurisdiction with respect to non-federal matters. I do not understand that to be the law. In Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 219 the Full Court said: The Court's jurisdiction is to determine each of the claims which together constitute a federal "matter". That jurisdiction cannot be limited, as the argument of the second and third respondents would suggest, to the determination of only those claims, federal or attached, which are successfully maintained. On the contrary, the jurisdiction is to entertain, and determine, all claims constituting a "matter" whatever their ultimate fate. Any other approach would involve the extremely inconvenient result that the existence or absence of jurisdiction to deal with a particular claim would depend upon the substantive result of that claim … 5 The applicant effectively now says that the claim of misleading or deceptive conduct was always doomed to failure because the representation upon which it relied had in fact not been made at any relevant time. It is indeed difficult to understand how the applicant, a solicitor, could have become an applicant upon such a basis, but it is not necessary that I consider that matter now. It seems to me that he invoked federal jurisdiction, and I cannot see that the fact that he has now decided that the claim will not succeed should lead me to conclude that the jurisdiction was never invoked. 6 In this regard I refer also to various passages in a document which has been handed to me. It is, in effect, a paper delivered by the present Chief Justice of this Court, in which the jurisdiction of the Court is explained. At pages 21 and 22 his Honour deals with the authorities concerning the question of federal jurisdiction. His Honour said: Once federal jurisdiction is attracted to a court the jurisdiction which is exercised by that court throughout the case will be federal, save as to a completely disparate claim constituting in substance a separate matter … 7 His Honour continued: Once federal jurisdiction is attracted the court is not exercising State jurisdiction. There is no notion of concurrent exercise of federal and State jurisdiction over the matter. It is federal. 8 His Honour then cited numerous authorities for these propositions and continued: When a right, as part of a claim or defence, which is said to arise under a law of the Parliament is put forward by the party, the assertion of the federal issue, not its disposition and not its merit, attracts the jurisdiction of the court to the relevant matter of which the federal issue forms part … 9 Finally, at p 22 his Honour went on: The failure of the federal issue generally does not deny the consequences of its assertion. If non-colourable, the assertion clothes the court with jurisdiction to hear the federal and non-federal parts of the matter – the whole matter. It is the request to the court by a litigant to deal with a matter in which the litigant seeks the aid of the court to decide whether it has a valid right or defence arising under Commonwealth law in the sense described above which is crucial. Jurisdiction is attracted by a non-colourable claim or assertion within the matter by one of the parties to it. 10 These propositions all reflect my own understanding of the way in which this jurisdiction works. I have also been referred to comments to similar effect by Leeming JA in his work, Authority to Decide: The Law of Jurisdiction in Australia. There is no merit whatsoever in the argument that the Court is without jurisdiction. It may be, however, that where the Court's jurisdiction in not genuinely invoked, or is invoked by way of a colourable claim (that is, a claim which has no merit and is motivated by a desire otherwise than a genuine desire to have the matter resolved), the general rule as outlined in Wakim may not apply. I do not understand the present applicant to assert that at the time at which the jurisdiction of the Court was engaged, he did not intend to prosecute the relevant claim. It follows that to the extent that the present application relies upon the alleged absence of jurisdiction, it must fail. In any event that application could have related only to the exercise of jurisdiction by this Court over the State law-based matter, that is, the claim in contract. The claim for misleading or deceptive conduct is within the jurisdiction of this Court and must be determined by it. The effect of my decision is that both matters should proceed in this Court. 11 There is, nonetheless, as I have said, an application for leave to discontinue. I have been referred to authorities that suggest that the Court will not readily refuse an application by an applicant or plaintiff to discontinue the proceedings. Where such an application is made in the course of the conduct of the litigation, but prior to the trial, there is much to be said for that proposition. Why, one asks rhetorically, would one compel an applicant to continue with proceedings if he or she no longer wished to do so, provided that to allow discontinuance would not be unfair to the other party? 12 A number of other considerations may come into play, such as whether there is a risk that the matter will again become the subject of litigation at the suit of the same applicant, and the question of costs thrown away in the proceedings to date. As a general proposition, where an application is made well prior to trial, and upon appropriate arrangements being made as to the matters to which I have referred, particularly as to costs, an application for leave to discontinue would probably be successful. However that is not the present case. The matter has been set down for trial for quite some time. The effect of its being set down is that the parties have been proceeding upon the basis that the matter would come to trial, and that they would be required to lead their evidence and make their submissions. 13 To come to the Court today and ask to discontinue seems to me to be a very extreme situation, and not one in which an applicant should assume that any application for leave to discontinue will be successful. The respondent is here and, apparently, in a position to go on. The applicant ought reasonably be expected to proceed. 14 Something has been said by counsel for the respondent about the prospects of success in the action. As pleaded, it seems to me that the application probably has little prospect of success. The allegation is that the respondent held himself out as having the following areas of expertise: contract and commercial disputes; trade practices; class actions; and representative proceedings. 15 It seems that at the trial, the quantum of the relevant claim was to be proven by expert evidence, and that the evidence which was led from an apparently qualified expert, was not accepted by the trial Judge. It is pleaded that the way in which the expert performed this function had been as advised by the respondent. However, the trial Judge had a different view. As a result it is alleged that the trial Judge was unable to award a full and accurate amount of compensation to the plaintiffs in the action, and that as a result, the defendants in that action have intimated that in view of the plaintiffs' failure on that point, they will seek to avoid paying the costs associated with the expert and associated advocacy and Court time. 16 It is said that the respondent, by holding himself out to have the competence referred to above, "which he plainly did not have" engaged in misleading and/or deceptive conduct contrary to the Australian Consumer Law, or was otherwise in breach of an implied term of the contract that he was so qualified and competent. The claim is for damages, being the moneys owed by the applicant to the respondent for his fees and wasted costs, being amounts expended by the applicant on behalf of his clients and costs, and costs charged by the applicant which will not be paid by the defendants in the group action. 17 It seems likely that the so-called wasted costs are really costs which will be recovered against the applicants in the action rather than the present applicant, although the lost fees may properly be claimed by the applicant. The damages associated with the respondent's fees will only be recoverable if it is shown that he was not entitled to those fees. In fact, as it turns out, the said representations had not been made prior to the conduct of the proceedings and hence it seems that the claim under s 8 is entirely misconceived. 18 As to the implied term, the present respondent submits that the pleaded term is that the respondent was qualified and competent to provide those services, but there is no particularization of any breach. This seems to be a fair criticism of the claim. It is said that the method of calculation apparently approved by the respondent was not approved of by the trial Judge, but that, by itself, does not demonstrate negligence or breach of duty on the part of the respondent. Again, the claim seems to be misconceived. In those circumstances it seems quite unlikely that any part of the claim could be successful in any event. 19 In those circumstances it seems to me that it would be inappropriate to give leave to discontinue. I decline the application and will proceed with the trial. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate: Dated: 11 September 2017